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As communicated to you in December 2002, BMW was in the process of conducting an investigation concerning cases of damage to the connecting rod bearings leading to engine failure on S54 engines in E46 M3 and M roadster/coupe cars.

We have completed our investigation and identified that E46 M3 cars with S54 engines produced from October 2001 - February 2002 require engine modifications to be performed as part of a service action. This action will consist of replacing the engine oil pump and connecting rod bearings. At the same time the engine control module will be reprogrammed to improve cold start characteristics, etc.

Service Information B11 02 03 has been issued containing all information required to perform this action. This action is not necessary for M roadster/coupe cars with S54 engines, or E46 M3 vehicles which had their engine replaced.

Notification letters to all customers will be mailed shortly.

To maintain customer confidence the 6-year or 100,000 miles extended engine warranty will continue for all M3 coupe/convertible and M roadster/coupe with S54 engines including entire MY 2003.

We have prepared a list of Questions and Answers, which should address most inquiries our customer may have. Please provide and discuss this information with your staff.

Thank you for your cooperation.

BMW of North America, LLC

BMW Service Action on M3 S54 Engines March 2003
March 28, 2003

(Q1) Why is BMW announcing a service action on M3 S54 engines?
(A1) We have determined that certain BMW M3's S54 engines could experience premature engine damage due to lack of lubrication to the connecting rod bearings.

(Q2) How many cars are affected by the service action?
(A2) Approximately 4,000 M3's are affected in the US (Worldwide 8,500).

(Q3) Which models might the problem occur?
(A3) BMW M3 coupe/convertible equipped with S54 engines and produced between October 2001 and February 2002.

(Q4) How many M3's with S54 engines in total were sold in the US?
(A4) Approximately 19,000 M3's with S54 engines have been sold in the US to date.

(Q5) When and how did BMW become aware of the problem?
(A5) Our customers and authorized centers notified BMW of isolated cases of engine damage starting mid year 2002.

(Q6) What seems to be the root cause of the problem?
(A6) BMW has identified the problem as a combination of contamination of the engine lubricating system during assembly and unfavorable tolerances in the oil pump in M3 S54 engines produced from October 2001 through February 2002.

(Q7) How does the driver become aware of the problem?
(A7) The engine will start knocking or making a loud rattling noise. At that point, we advise that you pull over to a safe location, turn the ignition off and call BMW Roadside Assistance at (800) 332-4BMW. Have your car towed to the nearest authorized BMW center.

(Q8) Is this a safety issue?
(A8) No. The vehicle can still be operated with no immediate need to have the repairs carried out. The driver would become aware of the problem if the engine started knocking or making a loud rattling noise. At that point, we advise the customer to pull over to a safe location, turn the ignition off and call BMW Roadside Assistance at (800) 332-4BMW to have the car towed to the nearest authorized BMW center.

(Q9) What is the solution to the problem?
(A9) The affected cars will require replacement of the engine oil pump and as a precautionary measure, replacement of the connecting rod bearings. In addition, the DME (engine control module) will be programmed with the latest software, which includes improved cold start characteristics.

(Q10) Why were engine failures seen in cars outside the affected production range? What is the reason for that?
(A10) Even under a highly sophisticated and top quality production process there can always be a small amount of defects no matter how careful and considerate one is. Our research cannot tie these isolated engine failures to the defined problem in the affected production range. Therefore, we have a very generous warranty and always stand behind our products.

(Q11) How many cars have experienced this engine damage?
(A11) To date, only a small percentage of cars have experienced engine damage.

(Q12) How many accidents or injuries are attributed to the problem?
(A12) To the best of our knowledge, none.

(Q13) Will BMW initiate a recall?
(A13) No, a service action.

(Q14) Have the customers been informed?
(A14) Customers were notified in December 2002 of the situation and BMW provided them with an extended warranty for all internal mechanical engine components lubricated by engine oil. These customers will receive a letter from BMW of North America, LLC, informing them of the analysis results. Customers with vehicles built in the identified production range are asked to contact their authorized BMW center to set up an appointment for the service action at their earliest convenience.

(Q15) How long will the repair take?
(A15) The repair will take approximately one days work, however, the actual time will vary depending on center scheduling.

(Q16) Are there any costs for the customer?
(A16) No.

(Q17) Can customers continue to drive their cars?
(A17) Yes. However, in the unlikely event that your engine is knocking or making a rattling noise please pull over to a safe location, turn the ignition off and call BMW Roadside Assistance at (800) 332-4BMW.

(Q18) Does BMW expect to tarnish their image?
(A18) No, BMW is being responsible in handling a product quality issue in the most customer-oriented and effective manner.

(Q19) Is the replacement oil pump used in the service action the same as the oil pump used in current production?
(A19) Yes. As part of an on-going production change, the oil pump used in the service action is also being used in current production as of January 2003.

(Q20) My car was not defined as being part of the service action. Can I have the service action performed anyway?
(A20) If you were not notified of your car being part of the service action there is no need for your car to undergo the action. Your vehicle is not within the identified production range.

(Q21) Why is BMW offering an extended warranty?
(A21) We want to prove to our customers that we understand their concern, stand behind our product and protect their investment.

(Q22) Do all BMW's equipped with S54 engines come with the 6 years/100,000 miles engine warranty extension?
(A22) Yes, to show our customers our commitment, we provided this warranty to all 2001, 2002 and 2003 model year BMW's with S54 engines.

(Q23) Why did it take so long for BMW to find a solution?
(A23) The issue required an intensive analysis to determine the root cause of the problem. We wanted to be sure that the correct countermeasures were implemented.

(Q24) Why is the M roadster/coupe not affected by this service action?
(A24) Our root cause analysis revealed that these cars do not call for a service action as the number of reported incidents are very low on these models; and there is a differentiation in the production process from the M3. BMW remains committed to maintaining our customers confidence and has also extended the engine warranty for the M roadster/coupe with S54 engines model year 2001/2002.

(Q25) What is the estimated cost of this service action to BMW?
(A25) On a worldwide basis approximately 6 million US dollars.

Thanks for posting this. They didn't answer the one question I had in mind, what if an M3 owner of a Q4 2001 production chooses not to have the recall done? Does he still have the 6/100 warranty? Changing rod bearings seems like a high risk operation due to changes in tolerance as the engine gets normal wear.

Originally posted by kster Thanks for posting this. They didn't answer the one question I had in mind, what if an M3 owner of a Q4 2001 production chooses not to have the recall done? Does he still have the 6/100 warranty? Changing rod bearings seems like a high risk operation due to changes in tolerance as the engine gets normal wear.

Hm...I can just picture it now. Pick up a Q4 2001E46 M3 in excellent condition and low mileage for DIRT CHEAP, take it to the track and have Stuka's instructor friend drive it until engine blows. Have BMW replace engine and VOILA! A near brand new BMW E46 M3 for low $40k.

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